Do sin taxes stop the sinning?

Gov. Mark Dayton is proposing a 94 cent per pack increase in the state tax on cigarettes as part of his budget proposal this year. The increase would raise $370 million in new revenue, the governor says.

Tobacco and liquor taxes, commonly called “sin” taxes, are popular ways to raise taxes without much complaint. They are voluntary taxes – if you don’t want to pay it, don’t smoke, and don’t drink. Anti-tobacco and anti-alcohol advocates agree with them because it encourages people to stop or reduce their consumption.

But do they really? We suppose at some point a really punitive tax on cigarettes, say $10 a pack, would put smoking beyond the financial reach of most people. And at that point, the state’s take would drop.

The Campaign for Tobacco Free Kids points out government statistics that show the consumption of cigarettes in the U.S. has dropped considerably between 1970 and 2006, when federal and state tax increase drove the average price up above $4 a pack. Statistics show the number of young people who start smoking has dropped as well, which is a good thing.

But a study by RTI International, published last fall, indicates that in New York, which has one of the highest cigarette taxes in the nation, died-in-the-wool, nicotine-stained smokers tend to keep smoking, and lower-income smokers spend more of their income on tobacco the more the tax rises.

Certainly the tax induces many to quit, but there are still those who just can’t quit. Many can’t afford the nicotine patches and gum and other stop-smoking tools, any more than they can afford cigarettes.

If the state is going to ratchet up the tax on a pack of cigarettes, a portion of that revenue should be dedicated to helping the low-income smokers who can’t quit on their own. It would be good for the state.